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Epistar aims to meet demand in 2015 through Epitaxy deal

TAIPEI, Taiwan -- Epistar Corp., (晶元光電) one of Taiwan's leading LED chip suppliers, said Monday that a deal to acquire a smaller Taiwanese rival — Formosa Epitaxy Inc. — is aimed at expanding its production capacity to meet rising demand in 2015.

During a special general meeting in which Epistar's shareholders approved the acquisition deal, Chairman Lee Biing-jye said his company is keen to raise its economy of scale, as a larger-sized supplier in the global LED industry could grasp a larger market share. Meanwhile, Formosa Epitaxy shareholders also approved the deal in a separate shareholder meeting.

Lee said a larger Epistar is expected to meet rising demand in 2015, in particular in the second quarter of the year, when peak season effects could boost shipments.

In late June, Epistar announced that it would acquire Formosa Epitaxy through a stock swap in which Epistar will exchange one of its common shares for 3.448 Formosa Epitaxy shares.

Epistar currently ranks as the world's largest aluminum gallium indium phosphide epitaxial wafer and chip supplier and the second-largest indium gallium nitride epitaxial wafer and chip maker.

After the acquisition, Epistar will become the biggest vendor of both LED products and will have a 30-40 percent share of the global LED epitaxial wafer and chip market. The company expects the acquisition deal to be completed by the end of this year.

Lee said that as the global LED industry is on the road to recovery, Epistar has to position itself well to take advantage of the uptrend by raising production capacity, and the acquisition deal is part of its efforts to launch new products and boost Epistar's supply.

Lee said that in the production expansion stage, Epitar will need a larger workforce and the acquisition will allow the company to make better use of Formosa Exitaxy's experienced staff.

He said Epistar is unlikely to make massive layoffs after the completion of the acquisition deal.

Taiwan's Fair Trade Commission issued a green light to the acquisition deal last week.

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